News from Townsville Enterprise

October 6th, 2016

Sun Metals CEO - Yun Choi CEDA Speech

Committee for Economic Development of Australia (CEDA)

Speech Transcript

I would like to first thank CEDA and Ms Kyl Murphy for this wonderful opportunity. I would also like to welcome the Honourable Annastasia Palaszczuk, Premier of Queensland and her Cabinet members to Townsville, and thank you for your Government’s commitment to growth and innovation, through initiatives like Advance Queensland Fund.

Sun Metals is a zinc refinery. We buy zinc concentrate (which looks like dirt but contains 50% zinc) from Australian and international mines, and purify it into 99.995% zinc ingots to be used in steel products for houses and cars. In doing so, we employ about 300 people, mostly from Townsville.

Korea Zinc, Sun Metals’ parent company, started as an unimpressive 50,000 tons zinc refinery in 1974, and it has grown to be the biggest zinc producer in the world with 1,230,000 tons of zinc production annually. Its Onsan Plant in Korea is the biggest zinc, lead and silver producing facility in the world. Despite its name, “Korea Zinc”, it produces more than 20 elements, and the Onsan plant is the only refinery which produces zero waste, making it the most technologically advanced refinery in the world.

As in the case of all the great companies, this amazing growth and technological prowess has been achieved by years of bold yet calculated decisions to invest aggressively and to innovate. During the last 5 years alone, Korea Zinc has invested almost $2 billion. Our honorary chairman, who founded Korea Zinc more than 40 years ago, simply cannot go through a lunch without telling us at least once, “we have to keep investing; when we run out of things to invest in, that’s when we have real problems.” Luckily, we have not yet run out of investments.

As a 100% subsidiary of Korea Zinc, Sun Metals was born with the same DNA. But, its early years were not easy, and somewhere along this path, we found ourselves just ‘surviving’. Unlike our parent, Korea Zinc, Sun Metals’ annual investment averaged modestly at [$20 million] per annum. It was around that time, when my personal journey with Sun Metals and Townsville began. It was the end of 2013. Early December. Sun Metals had run losses for two years in a row, and there was no end in sight. A few of us from Korea Zinc had spent 6 months looking at every aspect of its operations. We then had flown to Townsville to present our recommendations to the then-management of Sun Metals. During this trip, a very strange thought briefly crossed my mind. I quickly brushed it aside, because it was a ridiculous idea. But it would not go away, lingering in my head all throughout the 10 hour flight back to Seoul. That thought was, “I want to come here and try to turn things around.” This really was a crazy idea, not really a ‘thought' but more of an ‘impulse.’ I had just ended my assignment in Peru which was the longest 2 years of my life. My family and I were just starting to settle down in Seoul, and we were comfortable. Why do I want to put everything at risk yet again, and willingly take on an almost impossible job? Prudence, caution, common sense… These things were not components of my inexplicable desire. Like I said, it was more of an impulse, but an impulse that felt too much like a calling to ignore. In less than a month, on January 7th, 2014, I was in Townsville, as the new CEO.

The rest is history. My 288 colleagues and I held each other up through countless challenges, and dared to share a dream. In the end, we never saw red ink again. But more importantly, we have revived that once-lost strand of our DNA, one that drives us to perpetual innovation, and we are already finding new investment opportunities as a part of our everyday operation, and will be investing $50 million this year alone.

I am excited to say that today is not the end of this story, but its beginning. To continue on our journey towards innovation, Sun Metals has begun a technical review of a series of investments. While this is not, by any means, a certain or an easy thing, if executed, it will mean that we will invest approximately $460 million in the next 5 years, and will create about 100 extra jobs directly at the refinery on an ongoing basis.

The first stage is a construction of a 100MW solar farm at the refinery. This is pursuant to Sun Metals’ ongoing commitment to being the most energy-efficient zinc refinery in the world, as well as one of the most innovative and sophisticated energy consumer in Australia. The solar farm will be designed to provide power directly to the refinery or to sell electricity out to the grid, depending on the price of electricity and the production of the refinery. The final decision for this investment is expected in the first half of 2017.

The second stage is the Phase 1 Expansion of the Townsville Refinery. If executed, this will involve implementation of an innovative and cutting-edge zinc refining technology, with enhanced zinc recovery and 25% increase of zinc production. Korea Zinc is already seeking to implement the same technology in its Onsan plant. Earthwork has already begun, and we plan to commission the new plant at the end of 2017. Sun Metals’ feasibility study will proceed simultaneously with the construction in Korea, and will benefit greatly from the vicarious learnings and experiences derived therefrom. Sun Metals will therefore make its final investment decision on the Phase 1 Expansion in the early 2018.

Some of you who know Sun Metals will recognise how uncharacteristic it is for us to make such a public announcement of projects still under review. Usually we are an incredibly shy bunch. The deviation from our usual ways is not because these projects will be easy. In fact, this will be one of the hardest things that we have ever done. However, one thing that we have learned from our recent climb from the hole is that it is the journey that defines us, not the destination. To borrow the words of Yogi Berra, whose wisdom is matched only by Master Yoda, “when there is a fork in the road, you got to take it.” And this journey on which we are embarking today will make us stronger, more resilient and more innovative, regardless of its outcome. And as much as this will be a story of Sun Metals, it will also be, in more ways than one, a story of Townsville.

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